Maui News reported today (May 15, 2019) on the "Council Budget up for first reading," by Colleen Uechi, Assistant City Editor, which shows tax increases in the the new proposed budget. You can read directly on the website with photos (click here) or read below
After years of cutting back the mayor’s budgets, the Maui County Council is bringing an $823.6 million budget to the table, $43 million higher than Mayor Michael Victorino’s proposal and a touch above the $820 million proposal that former Mayor Alan Arakawa called his “most aggressive budget proposal to date.”
The fiscal year 2020 budget is headed for first reading before the Maui County Council on Friday, the culmination of dozens of meetings and public hearings since late March. The council has to pass the budget on second reading by June 10, or Victorino’s $781 million budget goes into effect.
Keani Rawlins-Fernandez, chairwoman of the Economic Development and Budget Committee, said on April 29 after the committee passed the budget that she was happy with the final product.
“I think we’re going to do great things,” Rawlins-Fernandez said. “We’re really putting our money where our mouth is. We talked about how affordable housing is a priority, and I think we made it a priority in this budget. I think we made environmental protection and cultural preservation a priority in this budget.”
But last year’s budget chairman, Council Member Riki Hokama, was critical of the increases, saying he had “never voted for a budget that I cannot even tell one person what is our expenses, what is our revenues and what did we fund.”
Council Member Riki Hokama speaks out against the council’s budget proposal on April 29.
“I’m kind of disappointed that we didn’t bring more clarity to the process,” he said during the April 29 meeting. “I’m still yet befuddled. I hope staff can show me the numbers that make more sense because eventually somebody’s going to have to explain to the taxpayers what we did, and I really don’t know who can, to be honest.”
All told, the council’s budget includes $670.8 million for operations (about $22.7 million more than the mayor’s) and $152.8 million for capital improvement projects (about $20 million more). They increased most categories of real property taxes — the county’s largest revenue source — to generate a net revenue of $358 million, close to $20 million more than both the mayor’s rates and the current rates.
When asked about the ways the budget prioritized affordable housing, Rawlins-Fernandez pointed to the addition of $400,000 to the mayor’s proposed $1 million affordable rental housing fund and the allocation of $1 million to a new experimental and demonstration housing projects fund. She also pointed to committee’s decision to increase the affordable housing fund to 4 percent of real property tax revenues (the Maui County Code requires at least 2 percent), which would total $14.3 million. (Combined with the current balance, the affordable housing fund would have $26.1 million in fiscal 2020.)
The council’s budget also ups funding for homelessness programs from $1.7 million to $2.2 million, including $250,000 for “homeless programs that collaborate with the community,” $200,000 for a mobile hygiene unit in Central Maui and $50,000 for homeless programs on Molokai.
Rawlins-Fernandez countered Hokama’s criticisms, saying that council members knew what was in the budget because “many of the projects that are really important to our districts were funded finally.”For example, the committee addressed the concerns of Council Member Tamara Paltin, a former lifeguard, adding about $400,000 to the Ocean Safety Program to cover staff increases from 52 to 64 and other needs like annual medical exams and new vehicles. For Rawlins-Fernandez’s district, the committee added $500,000 to the Office of Council Services to cover Phase I of a Countywide Master Plan for Shoreline Retreat that would start with Molokai.
The budget also puts money toward other environmental and conservation concerns, including $660,000 for the containment and removal of miconia and other invasives, $225,000 for the Maui Nui Marine Resource Council to do coastal water quality monitoring and Maalaea Bay water quality projects and $50,000 for the National Guard to work on coqui frog eradication. (The council also kept the mayor’s $2.5 million allocation for the coqui frog eradication project.)
On the capital improvement projects side, the council added $9.5 million in bond funds that would cover the purchase of Wailuku Water Co., an Arakawa proposal that stalled at the end of last year. They also put in $3.5 million in bond funds for a Lanai Youth Center and Skate Park, as well as some projects that still need bond authorization, like the $7.5 million Kihei-Makena sewer expansion.
“The administration will need to come back to the council to authorize taking out the loan necessary to finance the project,” explained David Raatz, supervising legislative attorney with the Office of Council Services.
The council in recent years has typically cut back the mayor’s budget proposals. Last year, the council pared Arakawa’s fiscal 2019 budget from $820 million to $758.3 million (7.5 percent decrease). The council also reduced his fiscal 2018 budget from $720.3 million to $705.2 million (2.1 percent decrease) and his fiscal 2017 budget from $711.5 million to $659.5 million (7.3 percent decrease).
At $823.6 million, the council’s fiscal 2020 budget is 5.5 percent higher than Victorino’s $781 million proposal and 8.6 percent higher than the current fiscal 2019 budget of $758.3 million.
Hokama said during the April 29 meeting that he thought the committee could’ve made more cuts and focused more on protecting shoreline properties.
“We were too shortsighted on finishing this year’s budget instead of setting the first step on what we’re going to need to do for the next 20 years,” he said.
But other council members at the meeting were supportive of the process. Council Chairwoman Kelly King said she was “happy we created a program first instead of creating the funding first and then trying to fit the program to it.”
“I think we’ve done a lot of hard work on shoring up infrastructure,” King said. “Every year when we get into budget, it’s not time to start making plans. I think we need to do that starting the week after we pass the budget in second reading and do the TIG (temporary investigative group) on tax reform and do the TIG for affordable housing . . . instead of waiting until we get into budget.”
Council Member Alice Lee, also a former budget chairwoman, was also pleased.
“This has been a truly collaborative process from beginning to end, even where you tried to average (council members’ tax) rates,” Lee told Rawlins-Fernandez. “I’m really happy with many of the decisions and the proposals of the members, because we are going to be doing some really new things.”
To view the budget committee’s report and full budget, visit mauicounty.us/agendas/. Click on the agenda for Friday’s meeting, then click “CR 19-49” on page 5 [see below].
Budget includes funds for housing, environment, infrastructure
The Maui County Council is proposing an $823.6 million budget for fiscal year 2020. Here’s a breakdown of some of the projects and programs:
HOUSING AND HOMELESSNESS
• $2.2 million for homelessness programs, including $200,000 for a mobile hygiene unit in Central Maui and $50,000 for homeless programs on Molokai.
• $1.4 million for affordable rental housing programs.
• $1 million for an experimental and demonstration housing projects fund.
• $850,000 for 22 affordable rental units at Hale Mahaolu Ewalu Phase II.
• $450,000 for a study to identify potential affordable housing sites.
ENVIRONMENT AND CONSERVATION
• $2.5 million for the coqui frog eradication project, and $50,000 for the National Guard to assist in eradication.
• $2.4 million in watershed protection and management.
• $500,000 for Phase I of a Countywide Master Plan for Shoreline Retreat, starting with Molokai.
• $660,000 for the containment and removal of miconia and other invasives.
• $225,000 for the Maui Nui Marine Resource Council to do water quality projects.
PARKS, ROADS, INFRASTRUCTURE
• $13.5 million for the West Maui recycled water system expansion project.
• $12.5 million for the Central Maui Landfill expansion.
• $7.8 million for the Kaupakalua road pavement reconstruction.
• $7.5 million for the Kihei-Makena sewer expansion project.*
• $4.1 million for bridge replacements in East Maui.
• $3.5 million for the Lanai Youth Center and Skate Park.
• $2.8 million for War Memorial Complex paving improvements.
• $1 million for the North South Collector Road.
• $4.4 million to the Ocean Safety Program to cover staff increases, annual medical exams, new vehicles.
• $1.8 million for a new Molokai police station outside the flood and tsunami evacuation zone.*
• $455,000 for the Pukoo Fire Station relocation.*
• $250,000 for a feasibility and assessment study for a new Haiku Fire Station.
*Bond authorization withheld, meaning that the administration must return to the council to authorize taking out a loan for the project.
* Colleen Uechi can be reached at firstname.lastname@example.org.
With the Assessment Property Values increasing over prior year, keeping the rates the same will in fact and effect be a property Tax increase already. Seems too often that the Maui Government officials do not understand that and when they increase the rates as well, they are compounding the net increase much more than they considered. The WMTA intends to make that point clear in our testimony regarding rates, to hold the line as that will already provide the County with significantly more income. We do not know what that exact amount of increase would be pending appeals and hope that a good number will be available to the Council and Administration to know prior to setting any new rate increases.
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To view the archives of the Tax Foundation of Hawaii's commentary click here.
For the Week of January 13, 2019
By Tom Yamachika, President
Last week, we spent some time on “variance reports,” which is how our state government agencies report differences in position count and spending from one year to the next. The agencies are also supposed to report on performance measures that they pick themselves, but sometimes still disregard this requirement.
Today, we examine “zero-based budgeting,” an idea that has been around for a while but was recently championed by House Finance Chair Sylvia Luke.
Zero-based budgeting assumes that nothing, not even the amount the legislature approved the previous year, is approved. Agencies will have to justify everything, all the dollars they want to spend and all the positions they want to have, from the bottom up.
This is a whole lot more work than agencies are used to doing, and it generates a lot more information than legislative staffs are used to reviewing during our compressed legislative session, so it’s going to be a tough sell all around – especially for people who don’t understand what ZBB is.
The international consulting firm McKinsey & Co. defines ZBB as something that goes beyond simply coming up with a budget:
"Zero-based budgeting is a repeatable process that organizations use to rigorously review every dollar in the annual budget, manage financial performance on a monthly basis, and build a culture of cost management among all employees. A world-class ZBB process is based on developing deep visibility into cost drivers and using that visibility to set aggressive yet credible budget targets. The annual budgeting process does in fact start from zero and is very detailed, structured, and interactive in order to facilitate meaningful financial debate among managers and executives. Throughout the year, multiple owners are tasked with managing performance and continuing the healthy debate on cost management. Through new system and process controls, and aligned incentive programs, all employees make cost management a part of their daily routine."
One of the key elements of ZBB is visibility. An organization needs to understand what money is being spent on, and why. In government agencies, especially larger ones, it’s difficult to obtain that understanding. Waste and fraud can be buried, not only because of some evil intent but simply because “it’s always been done that way.” It takes work to figure out why a task or process is being done, and only then can it be analyzed to determine if it can be done more efficiently or even if it is needed at all.
Nevertheless, it’s probably worthwhile to periodically take deep dives into an agency’s activities. Advantages of the process include sharpening the agency’s focus on its mission so marginally related activities can be identified and possibly refocused, identifying redundant activities, identifying artificial budget inflation, and increasing the efficiency of resource allocation. Doing things a certain way just because they’ve always been done that way might not be right when the times have changed and the agency’s priorities and needs have changed.
Yes, it takes leadership and hard work to do ZBB correctly. But if it is done correctly, the potential for savings to the public fisc is huge. McKinsey estimates that if properly implemented, ZBB can reduce sales, general, and administrative costs “by 10 to 25 percent, often within as little as six months.” We can’t afford not to try this.
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